Dive Brief:
- Hospital staffing firm American Physician Partners filed for Chapter 11 bankruptcy protection earlier this week, citing financial pressures from the COVID-19 pandemic, rising labor costs amid inflation and regulatory headwinds stemming from surprise billing legislation.
- By the end of July, the company had already transitioned its clients to other staffing companies or insourced operations within its client hospitals and health systems, according to a statement.
- The hospital staffing firm listed assets between $100 million and $500 million and debts between $500 million and $1 billion in a bankruptcy filing.
Dive Insight:
Founded in 2015 through the merger of two Tennessee-based healthcare companies, APP offered staffing services for emergency departments and other hospital care.
The company had contracts with more than 100 hospitals, freestanding emergency departments and other care sites in 15 states and utilized more than 2,500 physicians, according to bankruptcy filings.
The staffing firm saw “significant organic growth” from 2016 through early 2020, and it purchased nine physician practices during that time as the staffing industry consolidated.
But the pandemic challenged APP’s finances. Lower collections per patient visit, depressed stipend revenues and unanticipated increase in costs led APP to materially underperform in their projected financial performance for 2022 and early 2023, according to a bankruptcy filing. In 2022, the company reported a $140 million net loss.
The company also argued that the No Surprises Act, which aims to protect patients from unexpected bills after receiving care from out-of-network providers at in-network facilities, was a financial stressor.
“Although the legislative policy behind the No Surprises Act is sound, the regulatory implementation of the No Surprises Act was problematic, effectively shifting the balance of power in payment disputes too far in the favor of insurance companies (payors) and enabling them to significantly delay and unilaterally reduce or deny payments,” APP wrote in its bankruptcy filing.
The company said few claims submitted through the law’s independent dispute resolution process had been resolved, and many remained unpaid by insurers.
The dispute resolution process of the No Surprises Act has been litigated against and changed several times, leading lawmakers to express frustration about the law’s implementation in a House hearing earlier this week.
The company almost secured a buyer in June — and secured a letter of intent to acquire — but the deal fell through, according to the filings. Bloomberg, citing sources familiar, reported in July that APP had failed to ink a deal with staffing firm SCP Health.
APP’s bankruptcy comes about four months after physician staffing firm Envision Healthcare filed for bankruptcy. Envision also cited a “flawed” implementation of the No Surprises Act and financial hurdles during the pandemic, but it also faced legal battles with insurer UnitedHealthcare.
